"Edward DeMarco, the director of the Federal Housing Finance Agency, said the agency would begin forming a new company that would consolidate some of the 'back-office' functions currently replicated individually by each firm. The new company will have its own chief executive and board and for now would be jointly owned by Fannie and Freddie, said Mr. DeMarco, in a speech Monday afternoon before the National Association of Business Economics in Washington, D.C.

"Fannie and Freddie have operated for decades as independent firms in competition with each other, but last year the FHFA began working with the companies to create a single platform in which home loans could be packaged into securities. The companies were taken over by the U.S. Treasury in 2008 and the FHFA was tasked with conserving the firms' assets until Congress and the White House decided what to do with them."

The two firms help finance about two-thirds of U.S. home loans. Reuters reports:

"Since they were seized by the government, the companies have drawn nearly $190 billion from the U.S. Treasury to stay afloat.

"By creating a new securitization company, FHFA intends to pave the way for a single securitization platform, forcing Fannie Mae and Freddie Mac to abandon their current separate systems. DeMarco said the goal is to build a single infrastructure to support the mortgage credit business."

Essentially, the Journal explains, what's happening here is a winding-down of sorts. The third company will begin packaging and selling mortgage securities and then government can then decide what it wants to do with the new company.

"What we are trying to do...is to ease the transition from where we are today to wherever lawmakers decide the country ought to ultimately go," DeMarco said.